MORITZ, Circuit Judge.
These consolidated appeals arise from a government agency's decision to recapture, via administrative offset, funds that the agency allegedly overpaid to multiple grant recipients. The grant recipients brought suit in federal court, arguing in relevant part that the agency lacked authority to recapture the funds without first providing them with administrative hearings. The district court agreed and ordered the agency to repay the grant recipients. The agency now appeals that order.
If these underlying facts sound relatively straightforward, it's because they are. But they nevertheless give rise to three legal questions that are decidedly less so: (1) did the agency recapture the funds pursuant to a statute or regulation that imposed a hearing requirement, thus rendering the recaptures illegal; (2) if the agency didn't recapture the funds pursuant to such a statute or regulation, did it have authority to recapture the alleged overpayments at all; and (3) if not, must the agency reimburse the grant recipients for the amounts it illegally collected?
In answering the first of these three questions, the panel unanimously agrees that the agency didn't recapture the funds pursuant to a statute or regulation that imposes a hearing requirement. Thus, we agree that the district court erred in ruling that the recipients were entitled to hearings before the agency could recapture the alleged overpayments.
But that's where our unanimous agreement ends; the remaining questions divide the panel. Ultimately, two members of the panel agree that the agency lacked authority to recapture the funds via administrative offset. Accordingly, we affirm the portion of the district court's order that characterizes the recaptures as illegal. Nevertheless, two other members of the panel agree that if the agency no longer has the recaptured funds in its possession, then the district court lacked authority to order the agency to repay the recipients. Thus, we reverse that portion of the district court's order and remand for further factual findings.
Congress enacted the Native American Housing Assistance and Self-Determination Act (NAHASDA) of 1996, 25 U.S.C. §§ 4101-4243, to help Indian tribes provide affordable housing for their members, see 25 U.S.C. § 4101(5). To that end, the United States Department of Housing and Urban Development (HUD) allocates NAHASDA grant funds among recipient tribes each year.
In determining how to allocate those funds, HUD employs a regulatory formula
Appellees are various tribes (the Tribes) that allegedly inflated their eligible-unit counts — and therefore allegedly received overpayments — during various years.
In relevant part, the Tribes argued that HUD lacked authority to recapture the funds without first providing the Tribes with administrative hearings. The district court agreed. As a result, the court ordered HUD to restore the recaptured funds to the Tribes. HUD now appeals.
Because these appeals arise under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701-706, "[w]e take `an independent review of [HUD's] action' and are not bound by the district court's factual findings or legal conclusions." Utah Envtl. Cong. v. Bosworth, 439 F.3d 1184, 1188 (10th Cir. 2006) (quoting Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1569 n.16 (10th Cir. 1994)). We will "set aside agency action if it is `arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.'" Id. (quoting 5 U.S.C. § 706(2)(A)).
On appeal, HUD advances three challenges to the district court's ruling that HUD acted illegally by recapturing the funds without conducting administrative hearings. First, HUD asserts that it wasn't required to hold hearings before it recaptured the funds because the only statutes and regulations that might require hearings don't apply here. Second, HUD insists that in the absence of an applicable statute or regulation, it was instead empowered to recapture the alleged overpayments via administrative offset under the common-law doctrine of payment by mistake. Third, HUD states that even if it lacked common-law authority to recapture the alleged overpayments via administrative offset, the district court nevertheless erred in ordering HUD to return the alleged overpayments to the Tribes because — with one exception — such an order amounts to an award of "money damages" and therefore runs afoul of 5 U.S.C. § 702.
In concluding that the Tribes were entitled to hearings before HUD could recapture the alleged overpayments, the district court relied on the relevant versions of 24 C.F.R. § 1000.532 and 25 U.S.C. § 4161(a)(1). HUD doesn't dispute that these provisions required it to provide administrative hearings under certain circumstances. Instead, HUD argues that those circumstances simply aren't present here. For the reasons discussed below, we agree. And because these provisions therefore don't apply to HUD's recapture of the alleged overpayments, neither do their hearing requirements.
Under 24 C.F.R. § 1000.532 (1998), HUD had authority to "make appropriate adjustments in the amount of the annual grants under NAHASDA in accordance with ... findings" that HUD made "pursuant to reviews and audits under [25 U.S.C. § 4165]." 24 C.F.R. § 1000.532(a) (1998). But before doing so, HUD had to first provide "a hearing in accordance with [24 C.F.R.] § 1000.540."
The relevant versions of § 4165 required HUD to undertake "such reviews and audits as may be necessary or appropriate" to make three specific determinations: (1) whether each tribe "carried out its eligible activities in a timely manner, ... carried out its eligible activities and certifications in accordance with the requirements and the primary objectives of this chapter and with other applicable laws, and has a continuing capacity to carry out those activities in a timely manner"; (2) whether each tribe "complied with [its] Indian housing plan"; and (3) whether each tribe's "performance reports ... [were] accurate." § 4165(a) (1998); see § 4165(b) (2006).
Both the Ninth Circuit and the Court of Federal Claims have held that when HUD reviews a tribe's report of its eligible housing stock, that review falls within the scope of the first of these three categories, i.e., within HUD's authority to review a tribe's activities and certifications. See Crow Tribal Hous. Auth. v. Dep't of Hous. & Urban Dev., 781 F.3d 1095, 1103 (9th Cir. 2015) ("[W]e conclude HUD's ... FCAS review constituted an audit within the meaning of § 4165 to determine whether the Tribe had carried out `eligible activities and certification in accordance with this chapter and other applicable law.'" (quoting § 4165(b)(1)(A)(i)(II))); Lummi Tribe of Lummi Reservation v. United States, 106 Fed.Cl. 623, 630 (2012) ("Such a review, we believe, comes within [§ 4165's] broad mandate to ensure that the grant program is being conducted in accordance with NAHASDA." (citing § 4165(b)(1)(A)(i)(II))).
But as HUD points out, Crow doesn't acknowledge that "eligible activities" and "certifications" are defined terms — let alone discuss whether, as defined, those terms encompass a tribe's report of its eligible housing stock. Instead, in concluding that HUD's review of a tribe's reported eligible housing units constitutes a review or audit for purposes of § 4165, Crow
We decline to take this approach. Instead, we agree with HUD that the applicable statutes unambiguously establish that the terms "eligible activities" and "certifications" don't encompass a tribe's report on its eligible housing units. See 25 U.S.C. § 4132 (1998) (explaining that eligible housing activities include housing assistance, development, housing services, housing management services, crime prevention, safety activities, and model activities); id. § 4112(c)(5) (listing certifications); id. § 4114(b)(1) (requiring certification regarding labor standards); id. § 4115(c) (requiring environmental certification).
We see nothing in these statutes pertaining to a tribe's report of its eligible housing units. And because these statutes therefore unambiguously resolve this issue, we see no need to apply the Indian canon. Accordingly, we part ways with both the Ninth Circuit and the Court of Federal Claims to the extent those courts have held that when HUD reviews a tribe's report of its eligible housing stock, that review falls within the scope of HUD's authority to review or audit a tribe's activities and certifications. See § 4165(a)(1) (1998); § 4165(b)(1)(A)(i)(II) (2006).
For similar reasons, we reject the Court of Federal Claims' conclusion that HUD's review of a tribe's report on its eligible housing units falls within the second and third categories of HUD's § 4165 authority, i.e., within HUD's authority to review or audit a tribe's Indian housing plan or its performance reports. See § 4165(a)(2), (3) (1998); § 4165(b)(1)(A)(iii), (B) (2006); see also Lummi, 106 Fed.Cl. at 630 (reading § 4165 "as conferring broad authority on the Secretary to review a grant recipient's performance under NAHASDA, including monitoring a grant recipient's compliance with its Indian housing plan and verifying the accuracy of the recipient's performance reports"). Again, nothing in the relevant statutes suggests that either a tribe's Indian housing plan or its performance reports must (or even may) include information about the number of eligible housing units in that tribe's possession. See § 4112 (1998) (discussing Indian housing plans); 25 U.S.C. § 4164 (1998) (discussing performance reports). Instead, "[t]he Formula Response Form is the only mechanism that a recipient shall use to report changes to the number of FCAS." 24 C.F.R. § 1000.315(b).
In short, reviewing a tribe's report on its eligible housing units doesn't fall within any of § 4165's three defined categories of audit-and-review authority. Accordingly, HUD didn't recapture the alleged overpayments at issue here based on findings HUD made "pursuant to reviews and audits under [§ 4165]."
Alternatively, the Tribes argue that even if they weren't entitled to hearings under 24 C.F.R. § 1000.532(b) (1998), they were nevertheless entitled to hearings under § 4161 (1998). For two reasons, we again disagree.
In relevant part, § 4161 (1998) provides,
§ 4161(a) (1998).
According to the Tribes, § 4161(a) (1998)'s hearing requirement applies here because HUD "reduce[d]" the Tribes' NAHASDA payments under § 4161(a)(2) (1998). But § 4161(a)(2) (1998) only applies when HUD "reduce[s] payments" to a tribe "by an amount equal to the amount of such payments that were not expended in accordance with" NAHASDA. § 4161(a)(2) (1998) (emphasis added). And as HUD notes, it has never suggested or alleged that the Tribes "expended" the alleged overpayments in such a manner. Id. Instead, HUD alleged only that the Tribes' wrongly received the alleged overpayments.
Relying on City of Boston v. Department of Housing and Urban Development, 898 F.2d 828 (1st Cir. 1990), the Tribes characterize HUD's emphasis on § 4161(a)(2) (1998)'s use of the term "expended" as "hyper-technical," Aplee. Br. 31 (quoting Boston, 898 F.2d at 832).
In Boston, the statute at issue required HUD to provide a hearing before it "terminate[d]... payments" to the grant recipient. 898 F.2d at 831. And HUD argued that because the grant recipient hadn't yet "received any funds ... there was no `termination' of `payments.'" Id. The First Circuit rejected this "hyper-technical" interpretation of the statute. Id. at 832. But in doing so, it relied on other language in the statute at issue — language that suggested Congress was concerned with "withhold[ing] relevant funding whenever a recipient ... failed to comply with the controlling law," regardless of "[w]hether the promised payments ha[d] or ha[d] not begun." Id. Here, the Tribes point to no similar language that suggests Congress, in drafting § 4161, was concerned with money that the Tribes wrongfully received,
So too is their reliance on Kansas City v. Department of Housing and Urban Development, 861 F.2d 739 (D.C. Cir. 1988). The Tribes assert that, in Kansas City, the court treated as applicable a statute that allowed HUD to "reduce [grant] payments to the recipient ... by an amount equal to the amount of such payments which were not expended" properly, 861 F.2d at 740 (emphasis added) (quoting 42 U.S.C. § 5311 (1982)) — even though "[t]here was no allegation of unlawful expenditure[s]," Aplee. Br. 31.
But it doesn't appear that either the parties or the court in Kansas City addressed any possible distinction between expending funds and receiving them. In fact, the Tribes acknowledge as much in arguing that Kansas City "implicitly" resolves this issue. Aplee. Br. 30. "Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents." Webster v. Fall, 266 U.S. 507, 511, 45 S.Ct. 148, 69 S.Ct. 411 (1925). Thus, we decline to rely on Kansas City's "implicit[]" answer to the question of § 4161's applicability. Aplee. Br. 30.
Instead, we adopt the Ninth Circuit's explicit answer to this precise question. When HUD alleges only that a tribe incorrectly received funding — but makes "no determination on whether any NAHASDA funds [were] improperly expended" — HUD doesn't "act under § 4161, and, accordingly," isn't subject to § 4161's hearing requirement. Crow Tribal Hous. Auth., 781 F.3d at 1102 & n.5 (emphasis added); cf. Fort Belknap Hous. Dep't, 726 F.3d at 1106 (holding that § 4161 wasn't implicated where HUD alleged only that tribe wrongly received funding for ineligible housing units, not that tribe expended those funds in manner that wasn't "in accordance with" NAHASDA (quoting § 4161(a)(1)(B))). And because HUD has never challenged the Tribes expenditures of the alleged overpayments, we agree with HUD that the Tribes weren't entitled to hearings under § 4161 (1998).
Alternatively, even if we agreed with the Tribes that there exists no meaningful distinction between receiving funds and expending them, we would nevertheless conclude that § 4161 (1998) doesn't apply to HUD's recapture of the alleged overpayments.
In relevant part, § 4161 (1998) provides, "[I]f the Secretary finds after reasonable notice and opportunity for hearing that a recipient of assistance under this chapter has failed to comply substantially with any provision of this chapter, the Secretary shall," e.g., "reduce payments ... to the recipient." § 4161(a)(2) (1998) (emphasis added). According to HUD, it has never suggested that the Tribes' alleged inflation of their eligible housing units constitutes substantial noncompliance. Thus, HUD concludes, § 4161 doesn't apply. Cf. Fort Belknap Hous. Dep't, 726 F.3d at 1104 (holding that applicable version of § 4161 didn't apply where "HUD neither alleged nor found" substantial noncompliance).
To support this argument, HUD points out that Congress amended § 4161 in 2008 to clarify that a recipient's failure "to comply with the requirements ... regarding the reporting of low-income dwelling units shall not, in itself, be considered to be substantial noncompliance." Pub. L. No. 110-411, § 4161(2), 122 Stat 4319. HUD asserts that this amendment amounts to a clarification rather than a substantive change. Thus, HUD concludes, the amendment applies retrospectively to HUD's pre-2008 recaptures of the alleged overpayments.
In determining whether the 2008 amendment applies retrospectively, we begin by asking whether "Congress has expressly prescribed the proper reach" of that amendment. Id. To that end, HUD points out that a Senate Report subtitle explicitly refers to the 2008 amendment as a "[c]larification." S. Rep. No. 110-238, at 10 (2007).
By "us[ing] ... the term `clarification'" in the 2008 amendment's legislative history, Congress unambiguously expressed "an intent that the amendment apply retrospectively." Dobbs II, 600 F.3d at 1282; see Dobbs v. Anthem Blue Cross & Blue Shield (Dobbs I), 475 F.3d 1176, 1178 (10th Cir. 2007) (remanding to district court to apply amended statutory language where "amendment's legislative history suggest[ed] that Congress expanded [relevant] definition to clarify ... legal ambiguity"); cf. Andrus v. Allard, 444 U.S. 51, 59 n.10, 100 S.Ct. 318, 62 L.Ed.2d 210 (1979) (accepting Senate Report's indication that amendment constituted "a clarification rather than a substantive change in the reach of the law"); Danielson v. Flores (In re Flores), 735 F.3d 855, 860-61 (9th Cir. 2013) (relying on title of House Report to interpret ambiguous statute).
In fact, as HUD points out, the Ninth Circuit has already relied on the language of this same Senate Report to conclude that (1) "the 2008 amendment was a clarification, not a substantive change to" § 4161, and (2) the amendment therefore applies retrospectively. Crow, 781 F.3d at 1101. We agree with the Ninth Circuit on this point, and we conclude that the Tribes' failure to accurately report their eligible housing units, standing alone, doesn't constitute substantial noncompliance. See § 4161(a)(2) (2009) ("The failure of a recipient to comply with the requirements of [25 U.S.C. § 4152(b)(1)] regarding the reporting of low-income dwelling units shall not, in itself, be considered to be substantial noncompliance for purposes of this subchapter.").
Because we see no indication that HUD ever suspected or alleged substantial noncompliance on the part of the Tribes, we conclude that HUD didn't act pursuant to § 4161 (1998) — and therefore wasn't subject to § 4161 (1998)'s hearing requirement — when it recouped the alleged overpayments. See Crow, 781 F.3d at 1101-02 (holding that HUD didn't "act under § 4161, and, accordingly, could not have violated a hearing requirement under that section," when HUD never alleged substantial noncompliance).
For the reasons discussed above, we agree with HUD that it didn't act under § 4161 (1998) or 24 C.F.R. § 1000.532 (1998) when it recaptured the funds. But this conclusion is a double-edged sword. True, it resolves one question in HUD's favor: it means the district court erred in ruling that HUD was required to provide hearings before recouping the funds. But it raises a second, more fundamental question: in the absence of an applicable statute or regulation, what gave HUD the authority to recoup the funds at all? See Killip v. Office of Pers. Mgmt., 991 F.2d 1564, 1569 (Fed. Cir. 1993) (explaining that federal agencies are "creature[s] of statute"); see also Michigan v. EPA, 268 F.3d 1075, 1081 (D.C. Cir. 2001) ("[I]f there is no statute conferring authority, a federal agency has none.").
In attempting to answer that question, HUD asserts that rather than proceeding under a statute, it recaptured the funds by using "its longstanding, common-law authority to recover payments made by mistake."
Of the six cases that HUD cites, only the Ninth Circuit's decision in Fort Belknap even arguably addresses whether a government agency administering a grant program can rely on this common-law right to unilaterally recover overpayments from a beneficiary. And the Ninth Circuit itself has since characterized this portion of Fort Belknap as dicta. See Crow Tribal Hous. Auth., 781 F.3d at 1105 n. 9. We agree. The question in Fort Belknap wasn't whether HUD had common-law authority to recoup NAHASDA overpayments. Instead, the "narrow issue resolved in Fort Belknap was whether [the Ninth Circuit] had jurisdiction to consider the tribe's direct appeal." Id. at 1104. And that question turned solely on whether HUD acted under § 4161(a) — not on whether HUD had authority to act pursuant to some common-law right. See Fort Belknap, 726 F.3d at 1100.
The next three cases that HUD cites are likewise unhelpful. They stand only for the limited proposition that the government has a right, even in the absence of express statutory authority, to sue to collect overpayments. See United States v. Wurts, 303 U.S. 414, 416, 58 S.Ct. 637, 82 S.Ct. 932 (1938) (citing "[g]overnment's long-established right to sue for money wrongfully or erroneously paid from the public treasury");
That leaves only United States v. Munsey Trust Co., 332 U.S. 234, 236, 67 S.Ct. 1599, 91 S.Ct. 2022 (1947), and Grand Trunk Western Railway Co. v. United States, 252 U.S. 112, 117, 40 S.Ct. 309, 64 S.Ct. 484 (1920).
At first glance, Grand Trunk appears to support HUD's assertion that it enjoys common-law authority to recover overpayments via administrative offset. There, the Court held that the Postmaster General "was under no obligation to establish the [alleged overpayment] by suit." 252 U.S. at 120-21, 40 S.Ct. 309. Instead, "[h]aving satisfied himself" of the alleged overpayment, "he was at liberty to deduct the amount of the overpayment from the moneys otherwise payable to the company to which the overpayment had been made." Id.
But in Grand Trunk, the government didn't mistakenly overpay the beneficiary of a grant and then withhold the amount of the overpayment from that beneficiary's future-year grant funds, as HUD did here. Instead, the overpayments in Grand Trunk arose in the context of a contractual relationship between the government and the plaintiff: the government entered into
Properly limited to its facts, Grand Trunk establishes that when the government enters into a series of contracts with a private party, it can deduct any amount it erroneously overpays that private party "by means of a later debit" to the parties' "running accounts." Id. at 121, 40 S.Ct. 309. But this appeal doesn't arise from a contractual relationship. Instead, it arises from a grant program designed to help the Tribes and their members "improve their housing conditions and socioeconomic status." 25 U.S.C. § 4101(5). And Congress explicitly acknowledged in enacting that grant program that "the United States has undertaken a unique trust responsibility to protect and support Indian tribes and Indian people." § 4101(3).
That unique relationship sets this case apart from both Grand Trunk and Munsey Trust, which also arose from a series of contracts. See Munsey Tr., 332 U.S. at 236-39, 67 S.Ct. 1599; Richard B. Cappalli, Federal Grants and Cooperative Agreements: Law, Policy, and Practice § 8:15, at 81 (1991 Cum. Supp.) (explaining that "traditional contract principles are inapropos to an understanding of assistance rights and responsibilities" in context of grant funding); cf. Md. Dep't of Human Res. v. Dep't of Health & Human Servs., 762 F.2d 406, 409 (4th Cir. 1985) (rejecting argument that court should apply "contractual principles" to federal grant program, and explaining that grant programs are instead "governed by the applicable statute[s] and implementing regulations").
As these authorities suggest, the rules that traditionally govern contractual relationships don't necessarily apply in the context of federal grant programs. See, e.g., Cappalli, § 8:15, at 80-81 (distinguishing between contracts and grants; explaining that grantor rights — including right to recapture funds — "must emanate explicitly or implicitly from the grant statutes, regulations duly enacted and consistent with the statute being implemented, or provisions in the grant agreement"; and noting that it's "unfair to subject the grantee to unannounced and undefined sanctions and remedies" in absence of such provisions). Based on the government's "unique trust responsibility to protect and support Indian tribes and Indian people," § 4101(3), we think it would be particularly "unfair," Cappalli, § 8:15, at 80, to apply common-law contract principles to HUD's recapture of NAHASDA funds. Thus, neither Grand Trunk nor Munsey Trust can support the weight of HUD's common-law-authority argument.
Accordingly, we hold that the district court properly rejected HUD's common-law-authority argument. And because HUD hasn't advanced on appeal any alternative basis for its authority to recapture the funds via administrative offset,
But this victory for the Tribes is largely a hollow one. That's because HUD enjoys sovereign immunity from claims for money damages. See Utah ex rel. Utah Dep't of Envtl. Quality v. EPA, 765 F.3d 1257, 1260 (10th Cir. 2014) (explaining that suits against federal agencies are barred by sovereign immunity absent a specific waiver of that immunity); see also 5 U.S.C. § 702 (waiving sovereign immunity for claims against agencies, but only for suits "seeking relief other than money damages" (emphasis added)). And at least some of the district court's orders directing HUD to repay the Tribes appear to award money damages.
The crux of the Tribes' claims is this: HUD wrongfully decreased their NAHASDA funding in various years by subtracting (1) the amount of any alleged overpayments the Tribes received in previous years from (2) the amounts to which the Tribes would have otherwise been entitled in subsequent years. For instance, HUD concluded that the Choctaw received overpayments in 1998, 1999, 2000, and 2001.
But the district court didn't order HUD to repay the Tribes until many years after HUD recaptured the alleged overpayments. For instance, the court didn't order HUD to repay the Choctaw until 2014 — approximately a decade after HUD withheld the relevant funds. And perhaps because it recognized the distinct possibility that HUD has long since distributed all of the funds from Congress' 2003, 2004, and 2005 NAHASDA appropriations, the court ordered HUD to repay the Choctaw "from all available sources," including (1) funds that were "carried[] forward from previous fiscal years" and (2) funds that were "appropriated in future grant years." App. vol. 12, 2463.
Citing this aspect of the district court's order, HUD asserts that the court awarded the Tribes money damages in violation of § 702. We agree.
The phrase "money damages" "refers to a sum of money used as compensatory relief. Damages are given to the plaintiff to substitute for a suffered loss, whereas specific remedies `are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled.'" Dep't of Army v. Blue Fox, Inc., 525 U.S. 255, 262 (1999) (quoting Bowen v. Massachusetts, 487 U.S. 879, 895, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988)).
Here, the district court awarded the Tribes money damages when it ordered HUD to compensate them using funds from grant years other than the grant years during which HUD wrongfully collected the alleged overpayments. For instance, the "very thing" to which the Choctaw says it's entitled is additional funding from Congress' 2003, 2004, and 2005 NAHASDA appropriations. Blue Fox, Inc., 525 U.S. at 262, 119 S.Ct. 687 (quoting Bowen, 487 U.S. at 895, 108 S.Ct. 2722). But to the extent that HUD has already distributed the funds from those yearly appropriations to other tribes, HUD can't possibly return those funds to the Tribes. Thus, the district court instead ordered HUD to pay the Tribes by "substitut[ing]" other funds for the funds to which the Tribes are actually entitled — i.e., funds from past- or future-year NAHASDA appropriations. Id. (emphasis omitted) (quoting Bowen, 487 U.S. at 895, 108 S.Ct. 2722).
This distinction may seem pedantic. After all, money is money. And surely the Tribes don't care whether HUD repays them using funds that remain from 2003's NAHASDA appropriation, or if it instead repays them from some other source. But "the fungibility [of] money" can easily "obscure[]" the difference between (1) "relief that seeks to compensate a plaintiff for a harm by providing a substitute for the loss," Cty. of Suffolk v. Sebelius, 605 F.3d 135, 141 (2d Cir. 2010) (emphases omitted), and (2) "relief that requires a defendant to transfer a specific res to the plaintiff," id.
To understand how that distinction operates to preclude relief here, assume for a
Because that specific house is no longer in HUD's possession, the district court can't order HUD to turn it over to the tribe that should have originally received it. Instead, the best the district court can do is order HUD to give that tribe the house's monetary equivalent. And that monetary equivalent amounts to substitute relief — i.e., money damages. See Blue Fox, Inc., 525 U.S. at 262, 119 S.Ct. 687; cf. Clymore v. United States, 415 F.3d 1113, 1118, 1120 (10th Cir. 2005) (remanding for findings regarding whether government still had in its possession the "four items seized from [plaintiff] at the time of his arrest"; "to the extent the government [was] no longer in possession of" plaintiff's property and plaintiff thus instead sought "monetary relief, sovereign immunity bar[red] his claim").
If sovereign immunity would bar the district court from ordering HUD to provide the tribe in this hypothetical scenario with "the cash equivalent" of the wrongfully withheld house, it likewise bars the district court from ordering HUD to provide the Tribes with the "cash equivalent" of the wrongfully withheld overpayments. Diaz v. United States, 517 F.3d 608, 611 (2d Cir. 2008); cf. id. at 612-13 (holding that doctrine of sovereign immunity precluded court from ordering government to pay "monetary equivalent" of seized currency, which could "no longer be identified or located in the coffers of the government"; reasoning that "currency should be treated like any other seized property: if the property is no longer available, sovereign immunity bars the claimant from seeking compensation").
And this rationale — i.e., the idea that courts should treat money like any other form of property for sovereign-immunity purposes — explains why two of our sister circuits have found the distinction between original funds and substitute funds dispositive in cases involving yearly grant appropriations. See Suffolk, 605 F.3d at 141 (explaining that because the "res at issue is identified by reference to the congressional appropriation that authorized the agency's challenged expenditure," a claim seeking funds from any other source "seek[s] compensation rather than the specific property the plaintiff aims to recover," and therefore "falls outside the scope of the waiver of sovereign immunity arising from § 702"); see also City of Houston v. Dep't of Hous. & Urban Dev., 24 F.3d 1421, 1428 (D.C. Cir. 1994) ("An award of monetary relief from any source of funds other than the [relevant fiscal year] appropriation would constitute money damages rather than specific relief, and so would not be authorized by [§ 702].")
The Tribes attempt to distinguish the facts in Houston and Suffolk from the facts here. First, they point out that HUD treats NAHASDA funds as interchangeable from year to year, by, e.g., "us[ing] funds appropriated in fiscal years 1998-2008 both to augment underfunding in prior fiscal years and to supplement funds appropriated in subsequent fiscal years." Aplee. Br. 75-76.
The Tribes appear to suggest that by treating NAHASDA funds as interchangeable from year to year, HUD has somehow implicitly waived its sovereign immunity against claims for money damages. But "[a] waiver of sovereign immunity `cannot be implied'"; it "must be unequivocally expressed." United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980) (quoting United States v. King, 395 U.S. 1, 4, 89 S.Ct. 1501, 23 L.Ed.2d 52 (1969)). Thus, to the extent that HUD shuffles NAHASDA funding between years, that fact is only relevant if by virtue of such shuffling, funds from the relevant yearly appropriations remain at HUD's disposal. If not, then the district court's orders directing HUD to repay the Tribes constitute orders to provide "money damages rather than specific relief, and so would not be authorized by [§ 702]." Houston, 24 F.3d at 1428.
In a related argument, the Tribes note that NAHASDA appropriations are "`no-year' appropriations." Aplee. Br. 74. And "[a] no-year appropriation is available for obligation without fiscal year limitation." 1 U.S. General Accounting Office, Office of the General Counsel, Principles of Federal Appropriations Law, at 5-6 (2d ed. 1991). Thus, the Tribes assert, the "res" at issue here "is the sum of all NAHASDA appropriations, carried forward and backward as they may be." Aplee. Br. 78 (emphasis added).
But the Houston court rejected a very similar argument. There, the district court ruled that "the lapse of the appropriation from which fiscal 1986 [grant] monies were drawn meant that there were no funds available from which HUD could lawfully repay" the plaintiff. 24 F.3d at 1424. The plaintiff challenged this ruling on appeal, arguing that HUD could nevertheless repay it by using "`no-year' funds that [were] not reserved for use in any particular year or for particular projects." Id. at 1428. The D.C. Circuit disagreed, reasoning that those "no-year" funds constituted "[a]n award of monetary relief from a[] source of funds other than the 1986 ... appropriation." Id.
So too here. Thus, to the extent the district court ordered HUD to repay the Tribes "from all available sources," e.g., App. vol. 12, 2463, we hold that those orders constitute awards of money damages unless HUD has at its disposal sufficient funds from the relevant yearly appropriations. Accordingly, we reverse in part and remand to the district court for factual findings regarding the availability of those funds.
In resolving this appeal, our divided panel unanimously agrees on one thing: the district court erred in ruling that a statute or regulation applies to render HUD's recapture of the alleged overpayments sans hearings illegal. But beyond that, unanimous agreement eludes us. Instead, we form two different majorities in answering the other two questions this appeal presents.
Two members of the panel agree that the only potential alternative source of authority HUD identifies on appeal is its common-law right to recover payments made by mistake. And because the same two members of the panel agree that this common-law right doesn't apply under the circumstances present here, we conclude that HUD lacked authority to recapture the funds. Accordingly, we affirm the district court's order to the extent that it characterizes the recaptures as illegal.
But two other members of this panel agree that even if HUD illegally recaptured the funds, the doctrine of sovereign immunity nevertheless precludes the district court from ordering HUD to repay the Tribes. Thus, with one exception, we reverse the portion of the district court's order that directs HUD to repay the Tribes and remand for factual findings regarding whether any of the recaptured funds remain in HUD's possession.
MATHESON, J., concurring in part and dissenting in part.
I join Judge Moritz's opinion except for Part II.C., which holds that, to the extent HUD no longer has the Tribes' particular funds, sovereign immunity bars the Tribes from recovering. The majority
The Supreme Court has explained that the nature of the relief sought, not the source of the funds, determines whether sovereign immunity applies. The Tribes are seeking specific relief — enforcement of NAHASDA's mandate. They are not seeking damages, and therefore the waiver of sovereign immunity in the Administrative Procedure Act ("APA"), 5 U.S.C. § 702, applies.
Although sovereign immunity poses no bar to the Tribes' recovery, a different limitation — the Appropriations Clause — may prevent them from obtaining their funds.
The following discussion attempts to expand and support these points.
"Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit." FDIC v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). "[A] waiver of sovereign immunity
Section 702 of the APA provides such a waiver:
5 U.S.C. § 702 (emphasis added).
The Supreme Court addressed the meaning of § 702's "money damages" phrase in Bowen v. Massachusetts, 487 U.S. 879, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988). Massachusetts claimed the federal government owed it Medicaid payments. Under Medicaid, the federal government provides financial assistance to states to provide low-income individuals with health care. See id. at 883-84, 108 S.Ct. 2722. When the federal government "disallowed" — i.e., refused to pay — certain expenses, Massachusetts sued for the money by asking the district court to reverse the disallowances. Id. at 886-88, 108 S.Ct. 2722. The Supreme Court held Massachusetts's case fell within § 702's waiver because it "[was] not a suit seeking money in compensation for the damage sustained by the failure of the Federal Government to pay as mandated; rather it [was] a suit seeking to enforce the statutory mandate itself, which happen[ed] to be one for the payment of money." Id. at 900, 108 S.Ct. 2722. The Court explained that § 702 does not bar actions that seek "monetary relief," only ones seeking "money damages." See id. at 896-97, 108 S.Ct. 2722.
Interpreting § 702, the Court distinguished substitutionary relief, which compensates the plaintiff for its losses, from specific relief, which gives the plaintiff the thing to which it is entitled. See id. at 893, 108 S.Ct. 2722. For example, when a plaintiff suffers "an injury to his person, property, or reputation," an award of "monetary compensation," or "damages," serves to substitute for that loss. Id. By contrast, "specific relief" includes "an order ... for the recovery of specific property or monies, ejectment from land, or injunction either directing or restraining the defendant officer's actions." Id. (quotations omitted). The Court quoted the D.C. Circuit: "`Damages are given to the plaintiff to substitute for a suffered loss, whereas specific remedies "are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled."'" Id. at 895, 108 S.Ct. 2722 (quoting Md. Dep't of Human Res. v. Dep't of Health and Human Servs., 763 F.2d 1441, 1446 (D.C. Cir. 1985) (Bork, J.) (in turn quoting D. Dobbs, Handbook on the Law of Remedies 135 (1973))).
Monetary relief can be specific or substitutionary. Thus, "[t]he fact that a judicial remedy may require one party to pay money to another is not a sufficient reason to characterize the relief as `money damages.'" Id. at 893, 108 S.Ct. 2722. Money is often substitutionary, such as when it compensates a plaintiff for a personal injury, but the monetary relief in Bowen was specific because Massachusetts sought "to enforce the statutory mandate itself, which happen[ed] to be one for the payment of money." Id. at 900, 108 S.Ct. 2722.
In contrast to Bowen, the Supreme Court ruled in Department of the Army v. Blue Fox, Inc., 525 U.S. 255, 256-57, 119 S.Ct. 687, 142 L.Ed.2d 718 (1999), that sovereign immunity barred the plaintiff's
Together, Bowen and Blue Fox reveal that the function of the remedy is critical to whether the action falls within § 702's waiver. In Bowen, the remedy was fulfilment of the plaintiff's statutory entitlement to federal payments under Medicaid. 487 U.S. at 900, 108 S.Ct. 2722. The Bowen suit fit within § 702's waiver because it gave the plaintiff the specific thing — federal Medicaid payments — to which it was entitled. In Blue Fox, the plaintiff sought, through an equitable lien, "money in the hands of the Government as compensation for the loss resulting from the default of the prime contractor." 525 U.S. at 263, 119 S.Ct. 687. The Blue Fox suit was outside § 702's waiver because it did not concern the thing the plaintiff was owed — payment from the general contractor — and was thus substitutionary.
In sum, under the Supreme Court's cases, the distinction between specific and substitutionary relief turns on the nature of the relief, not on the source of funds.
This case is similar to Bowen. The Tribes seek enforcement of their entitlement to NAHASDA funds. See 25 U.S.C. § 4111(a)(1) ("[T]he Secretary shall ... make grants under this section on behalf of Indian tribes...."). The Tribes do not allege the government destroyed or damaged their housing units or that other harms arose from the government's recapture of grant funds or failure to pay in a timely fashion. The Tribes seek only the grant funds themselves — the very thing to which they are entitled. As in Bowen, the Tribes have sued as statutory beneficiaries to enforce a mandate for the payment of money by the federal government. This is not a suit for damages, § 702's waiver applies, and sovereign immunity poses no bar.
The majority does not contend this case is closer to Blue Fox than Bowen. Its analysis rests on a meaning of "substitutionary" relief drawn from out-of-circuit cases that differs from the Supreme Court's precedent. The majority concludes the Tribes are requesting substitutionary relief because HUD has already disbursed the wrongfully recaptured funds and would now have to repay the Tribes with other moneys. I address this rationale and then discuss the two cases the majority relies on for support.
The majority contends the district court awarded substitutionary relief because HUD has disbursed the funds that should have gone to the Tribes. Maj. op. at 1226-27. Under this view, the source of funds to pay the Tribes matters. But using different dollars to satisfy the Tribes' specific entitlement does not make the Tribes' relief substitutionary. As discussed above, the function of the remedy determines whether it is specific or substitutionary. The Tribes are requesting specific relief because, just like in Bowen, they seek enforcement of "the statutory mandate itself, which happens to be one for the payment of money." 487 U.S. at 900, 108 S.Ct. 2722. In Bowen, Massachusetts was not asking to recover the exact same dollars the government had refused to pay it. Any dollars would do. See id. at 884 n.3, 887 nn. 8-9, 108 S.Ct. 2722 (noting it was unclear what had happened to the particular Medicaid funds).
Other forms of tangible property — the majority uses the example of a house — can have unique aspects that make replacement by similar goods a close but imperfect substitute. But money is fungible, or, as the majority says, "money is money." Maj. op. at 1226. The Tribes do not care, just as Massachusetts in Bowen did not care, which dollars they receive as long as their NAHASDA grant funds are paid to them. The majority errs in treating this dispute as though it were over rare coins. In Bowen, Justice Scalia recognized in dissent that the Court's discussion of "the very thing" to which Massachusetts was entitled was money, not particular currency. See 487 U.S. at 917-19 & n.3, 108 S.Ct. 2722 (Scalia, J., dissenting).
The majority's house example shows why the Tribes are seeking specific, not substitutionary, relief under Bowen. The majority posits that if HUD had wrongfully given one tribe's house to another tribe, the most that the wronged tribe could recover would be the house's monetary equivalent, which would be substitute relief and "money damages." Maj. op. at 1226-27. But that is not the situation we face here because money is interchangeable and houses are not. The Bowen Court discussed in-kind benefits to explain why suits for money can constitute specific relief:
Bowen, 487 U.S. at 895, 108 S.Ct. 2722 (majority opinion) (emphasis added) (quoting Md. Dep't of Human Res., 763 F.2d at 1446).
When a plaintiff is entitled to a sum of money, receipt of money totaling that sum brings the plaintiff the very thing to which it is entitled. Fungible money does not "substitute" for other money. Money is money.
To support its view that the source of the funds matters for purposes of sovereign immunity, the majority turns to two out-of-circuit cases. As detailed below, however, the results in these cases rested on mootness and the Appropriations Clause. Their discussion of § 702 and sovereign immunity is cursory and cannot be squared with Bowen.
In City of Houston v. HUD, 24 F.3d 1421 (D.C. Cir. 1994), HUD awarded Houston a grant of approximately $20 million out of 1986 appropriations. Id. at 1424. Four months later, HUD reduced the grant by $2.6 million and reallocated that money to other grant recipients. Id. Houston sued, but not before the congressional act appropriating the disputed money had lapsed. Id. Relying on the "well-settled" constitutional principle "that when an appropriation has lapsed or has been fully obligated, federal courts cannot order the expenditure of funds that were covered by that appropriation," the D.C. Circuit held the city's claim for monetary relief was moot because the appropriation was both lapsed and fully obligated. Id.; see also id. at 1427. The court explained the mootness problem stemmed from the Appropriations Clause. See id. at 1428 (discussing Appropriations Clause); see also id. ("Nothing in Bowen ... even obliquely addresses the question of expired or fully obligated appropriations....").
Although the D.C. Circuit grounded its holding in the Appropriations Clause, see id. at 1424, 1427, it tacked on a paragraph responding to Houston's "suggest[ion]" that HUD could pay the city using funds other than the 1986 grant funds, id. at 1428. The court said this would "run afoul" of § 702 because relief can be "specific" only when it is paid out of "a specific res." Id. Without further explanation or legal citation, the court announced: "An award of monetary relief from any source of funds other than the 1986 ... appropriation would constitute money damages rather than specific relief, and so would not be authorized by APA section 702." Id.
But whether the government has particular funds to pay a given claim is unrelated to whether the plaintiff is seeking damages. In a more recent case, the D.C. Circuit has said that Bowen requires courts to "focus on the nature of the relief sought, not on whether the agency still has the precise funds paid," and that "[w]here a plaintiff seeks an award of funds to which it claims entitlement under a statute, the plaintiff seeks specific relief, not damages." Am.'s Cmty. Bankers v. FDIC, 200 F.3d 822, 829 (D.C. Cir. 2000); see also id. at 830 ("[The plaintiff's] claim represents specific relief within the scope of 5
The majority also relies on County of Suffolk v. Sebelius, 605 F.3d 135 (2d Cir. 2010). The county claimed the Department of Health and Human Services had shortchanged it in awarding grant funds for an HIV/AIDS program in fiscal years 2007 and 2008. Id. at 137. Because those funds were exhausted, the Second Circuit held the Appropriations Clause made the case moot. Id. at 137-38. The court added, like the D.C. Circuit in City of Houston, that a plaintiff seeking to enforce a statutory mandate is limited to "the congressional appropriation that authorized the agency's challenged expenditure"; otherwise the suit becomes one for damages because no other "res" could provide "the specific property the plaintiff aims to recover." Id. at 141. And, again like City of Houston, the Second Circuit offered no explanation for why the source of the money matters for purposes of sovereign immunity.
Relying on these cases, the majority defines "the very thing" the Tribes are entitled to as the money for the particular NAHASDA grant years at issue. See maj. op. at 1226-27. But as discussed below, the annual appropriations point concerns whether HUD possesses properly appropriated funds to pay the Tribes, not whether the relief is specific or substitutionary. Instead of following the majority's cases,
Even if the majority is correct that the Tribes must extract their relief from a specific res to fit within § 702's sovereign immunity waiver, the majority has not explained why we should reject the Tribes' argument that NAHASDA funding generally, not particular yearly appropriations, is the relevant res.
In response, the majority cites City of Houston, where the D.C. Circuit, after holding the relevant appropriation had lapsed and was fully obligated, rejected the City's attempt to look to other funds that it claimed were "no-year" appropriations. Maj. op. at 1228-29; see City of Houston, 24 F.3d at 1428. The Tribes, however, do not seek to recover from other funds. They wish to recover from the NAHASDA funds themselves.
Under Bowen, the Tribes' suit is not for "money damages." Section 702 applies because they are seeking specific relief — enforcement of the statutory mandate. Sovereign immunity does not bar this suit.
Whether HUD has sufficient funds to satisfy the Tribes' claims is still an important question, but it has nothing to do with whether they are seeking "money damages" under § 702. Rather, the source-of-funds issue concerns the availability of properly appropriated funds.
Although sovereign immunity should not block the Tribes from seeking monetary relief for wrongfully withheld or retained NAHASDA funds, the Appropriations Clause may pose a separate problem. The Constitution provides that money can be withdrawn from the Treasury pursuant only to a congressional appropriation. See U.S. Const., art. I, § 9, cl. 7. As the Supreme Court has explained, the Appropriations Clause assures "that public funds will be spent according to the letter of the difficult judgments reached by Congress as to the common good and not according to the individual favor of Government agents or the individual pleas of litigants." Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 427-28, 110 S.Ct. 2465, 110 L.Ed.2d 387 (1990). When Congress appropriates funds to an agency, the text of the appropriation limits the agency's discretion to spend. See Salazar v. Ramah Navajo Chapter, 567 U.S. 182, 132 S.Ct. 2181, 2194-95, 183 L.Ed.2d 186 (2012). As applied here, HUD can pay NAHASDA funds to the Tribes only to the extent Congress has authorized HUD to do so.
The district court resolved the sovereign immunity issue in the Tribes' favor and awarded "funds from all available sources." See, e.g., Aplt. Addm. at A-1 (judgment for Fort Peck Housing Authority). It did not address the appropriations issue, which concerns what funds are "available."
The Tribes contend HUD has never argued that the Appropriations Clause constrains its ability to pay. See Aplee. Br. at 77. But HUD, although framing its position in terms of sovereign immunity, has said it "no longer has the funds" from the past grant years because they "have been fully obligated." Aplt. Br. at 66, 68. As discussed above, the availability of funds concerns the appropriations question, not sovereign immunity. The Tribes also contend remaining NAHASDA funds are available to satisfy their entitlement because past NAHASDA appropriations do not limit spending by year. If the Tribes are correct on that point, a dispute remains over whether there are sufficient funds to cover the Tribes' entitlements.
I would remand for the district court to analyze these appropriations questions.
Section 702 has waived HUD's sovereign immunity. The Tribes are not seeking money damages because they are seeking fulfillment of a specific statutory mandate. But because the parties dispute whether Congress has appropriated funds that HUD can use to satisfy the Tribes' entitlements under NAHASDA and because the district court did not address the appropriations issue, I concur in the majority's decision to vacate the judgments. I would, however, remand for further proceedings on the appropriations issue.
BACHARACH, J., concurring in part and dissenting in part.
I join the majority's excellent opinion in Parts II(A) and (C). But in connection with Part II(B), I respectfully dissent. In my view, HUD enjoyed statutory authority to recoup overpayments under the block grants. Accordingly, I respectfully dissent from the majority's conclusion in Part II(B) that HUD lacked this authority.
The Native American Housing Assistance and Self-Determination Act of 1996 ("NAHASDA") authorizes a pool of funds for HUD to allocate among Native American tribes. In this case, HUD overpaid certain tribes and sought to recoup the overpayments through administrative offset.
The tribes contend that HUD lacked authority to recoup the overpayments. According to the tribes, agencies like HUD can exercise authority only upon a delegation from Congress. See La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355, 374, 106 S.Ct. 1890, 90 L.Ed.2d 369 (1986). The tribes acknowledge that "Congress empowered HUD to administratively recapture grant funds." Appellees' Resp. Br. at 19. The tribes argue, however, that this statutory power is limited to 25 U.S.C. §§ 4161 and 4165. And, as the majority explains, these provisions do not apply here.
HUD argues that it obtained authority to recoup the overpayments through NAHASDA, which implicitly incorporated the longstanding common-law principle that governmental entities can recoup erroneous payments. I agree with HUD. Through NAHASDA, Congress incorporated common-law principles that allowed HUD to recoup the overpayments by adjusting the tribes' annual allocations. Because the majority reaches a different conclusion, I respectfully dissent with regard to Part II(B) of the majority opinion.
In justifying the administrative offsets here, HUD relies on the common-law principle that governmental entities may recoup erroneous payments. Appellants' Opening Br. at 44 (citing United States v. Wurts, 303 U.S. 414, 415, 58 S.Ct. 637, 82 S.Ct. 932 (1938)). The Supreme Court recognized this principle in United States v. Wurts, stating that the government can recoup overpayments through "appropriate action." 303 U.S. at 415, 58 S.Ct. 637.
As the tribes point out, Wurts involved a suit by the government to recoup its funds. See id. at 415-16, 58 S.Ct. 637 (noting that the government has a "long-established right to sue for money wrongfully or erroneously paid from the public treasury"). Thus, the tribes would limit the Wurts principle to situations involving suit brought by the federal government. See Appellees' Resp. Br. at 48 (arguing that the Wurts principle stands only for the proposition that the government may "bring a civil common law action in an Article III court to recover funds that
The majority agrees with the tribes' interpretation of Wurts, concluding that the Wurts principle allows the government only "to sue to collect overpayments." See Maj. Op. at 1222-23(emphasis in majority opinion). The majority recognizes that in Grand Trunk Western Railway Co. v. United States, 252 U.S. 112, 117, 40 S.Ct. 309, 64 S.Ct. 484 (1920), and United States v. Munsey Trust Co., 332 U.S. 234, 236, 67 S.Ct. 1599, 91 S.Ct. 2022 (1947), the Supreme Court allowed the recoupment of overpayments even without a suit. See Maj. Op. at 1223-24. But, the majority attempts to distinguish Grand Trunk and Munsey Trust based on the fact that they involved governmental contracts with private parties, not administrative offsets, and did not involve a "unique trust responsibility." Id. at 23-25.
I respectfully disagree. Wurts did not have occasion to address the availability of common-law authority to recoup overpayments in the absence of suit. Thus, Wurts cannot be read as a limitation on this authority. See Alwert v. Cox Comm'ns, Inc., 835 F.3d 1195, 1212 (10th Cir. 2016) ("An opinion is not binding precedent on an issue not addressed in the opinion."); see also Maj. Op. at 1221 ("`Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents.'" (quoting Webster v. Fall, 266 U.S. 507, 511, 45 S.Ct. 148, 69 S.Ct. 411 (1925))). Indeed, Wurts relied on prior Supreme Court opinions stating that the government's common-law authority may come from either a suit or an offset. Wurts, 303 U.S. at 415 n.3, 416 n.4, 58 S.Ct. 637 (citing Supreme Court opinions).
United States v. Tafoya, 803 F.2d 140, 141-42 (5th Cir. 1986) (citations omitted). Thus, four federal appellate courts have applied Wurts to allow administrative offsets even without the need for suit or the applicability of a government contract. See Bechtel, 781 F.2d at 906-07; Collins, 661 F.2d at 708; Wilson Clinic & Hosp., Inc., 494 F.2d at 51-52; DiSilvestro, 405 F.2d at 153, 155.
As the majority points out, these opinions do not involve a "unique [trust] relationship." Maj. Op. at 1224. But the majority does not
The majority points out that the government serves as a trustee for the tribes that are overpaid. But overpayments diminish the amounts available to other tribes, who are also beneficiaries of this trust relationship. The majority does not explain why the government's role as trustee would affect the widely recognized power to recoup overpayments.
The majority relies on an excerpt from a treatise by Richard Cappalli, Federal Grants and Cooperative Agreements: Law, Policy, and Practice. This excerpt discusses authorization to recoup funds otherwise owed to the governmental entity making the grant. Richard B. Cappalli, Federal Grants and Cooperative Agreements: Law, Policy, and Practice § 8:15, at 81 (1991 Cum. Supp.). But in the cited excerpt, Mr. Cappalli makes clear that even when trust relationships are involved, Congress implicitly delegates the power to administratively enforce grant programs notwithstanding the absence of an express statutory remedy:
Id. Mr. Cappalli's treatise does not suggest that a suit is needed when a governmental trustee seeks to offset funds that are otherwise owed, and the majority does not provide any other authority or reason to require suit when a governmental trustee seeks to recoup overpayments.
Congress implicitly delegated this common-law authority to HUD, authorizing it to recoup overpayments through offset. Indeed,
In enacting NAHASDA, Congress presumably retained the common-law authority to recoup overpayments. See United States v. Texas, 507 U.S. 529, 534, 113 S.Ct. 1631, 123 L.Ed.2d 245 (1993) ("`[S]tatutes which invade the common law... are to be read with a presumption favoring the retention of long-established and familiar principles, except when a statutory purpose to the contrary is evident.'" (quoting Isbrandtsen Co. v. Johnson, 343 U.S. 779, 783, 72 S.Ct. 1011, 96 S.Ct. 1294 (1952) (ellipsis in original))). Thus, Congress's silence on HUD's ability to recoup overpayments indicates an intent to adopt the common-law principle recognized in Wurts:
Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991) (internal quotation marks & citation omitted); see Norman J. Singer & J.D. Shambie Singer, Statutes and Statutory Construction § 50:1, at 143 (7th ed. 2012) ("All legislation is interpreted in the light of the common law and the scheme of jurisprudence existing at the time of its enactment.").
If Congress had not intended to delegate this common-law power to HUD, a gap in NAHASDA would have allowed misallocations without any expressly created mechanism for correction. In my view, however, the mechanism for correction would have been implied.
"[I]t is a fundamental principle of administrative law that the powers of an administrative agency are not limited to those expressly granted by the statutes, but include, also, all of the powers that may fairly be implied therefrom." Morrow v. Clayton, 326 F.2d 36, 43-44 (10th Cir. 1963); see Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843, 844, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ("Sometimes the legislative delegation to an agency on a particular question is implicit rather than explicit."). Through NAHASDA, Congress presumably delegated to HUD the powers fairly implied by the authorization to distribute funds among eligible tribes. These powers included authority to fill the gaps implicitly or explicitly created under NAHASDA:
Morton v. Ruiz, 415 U.S. 199, 231, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974). Congress not only vested HUD with broad authority to administer NAHASDA, but also specifically authorized HUD to determine how much money each tribe would obtain. 25 U.S.C. § 4111(a); see Kaw Nation v. Springer, 341 F.3d 1186, 1187 (10th Cir. 2003) (stating that block grants under NAHASDA are controlled by HUD).
If we assume that NAHASDA had not implicitly incorporated the common-law right of offset, NAHASDA's express delegation of authority would have contained a sizeable gap. This gap would unleash a Pandora's Box of problems if either HUD or a tribe made a mistake leading to a tribe's underpayment or overpayment. For example, suppose that
Now, suppose that HUD accidentally adds a zero and sends the Navajo Tribe a check for $1,000,000 instead of $100,000. Or, suppose that the Navajo Tribe accidentally miscounts its eligible housing units, inadvertently increasing the tribe's annual allocation from $100,000 to $1,000,000. In either event, what would happen? Left uncorrected, the Navajo Tribe would obtain a windfall of $900,000 and this windfall would leave HUD $900,000 short when allocating the remaining funds among other tribes.
This would have resulted in a gap that had not been expressly addressed in NAHASDA. Presumably, Congress would not intend to allow such a mistake to go uncorrected. This presumption suggests that Congress implicitly delegated to HUD the authority to fill this statutory gap and correct misallocations based on mistakes by HUD or a given tribe. See Fla. Med. Ctr. of Clearwater, Inc. v. Sebelius, 614 F.3d 1276, 1281 (11th Cir. 2010) (stating that "Congress implicitly delegated common law authority" to the Secretary of Health and Human Services to recoup overpayments from Medicare Part B providers); McNally v. United States, 483 U.S. 350, 373, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987) (Stevens, J., dissenting) ("The wide open spaces in statutes such as these are most appropriately interpreted as implicit delegations of authority to the courts to fill in the gaps in the common-law tradition of case-by-case adjudication."); see also Martin H. Redish & Christopher R. Pudelski, Legislative Deception, Separation of Powers, and the Democratic Process: Harnessing the Political Theory of United States v. Klein, 100 Nw. U. L. Rev. 437, 439 (2006) (stating that Congress sometimes delegates "common-law-making power" to "agencies empowered to administer the statute").
The majority implies that this power to fill gaps would require HUD to adopt regulations when filling statutory gaps. But the tribes have not questioned the sufficiency of HUD's implementing regulations.
In summary, HUD has the authority to recoup the overpayments. This authority stems from the common-law principle allowing offset of overpayments. Without incorporation of this common-law principle, NAHASDA would have contained a wide gap. Even then, Congress would have intended for HUD to fill that gap.
The majority reaches a different conclusion based on factual differences between our case and some of the opinions cited by HUD. But even if those opinions are distinguishable, many others support HUD's reliance on the common-law principle allowing governmental entities to recoup overpayments through administrative offset. I would apply those opinions rather than stop the analysis based on factual distinctions with HUD's cited cases. Accordingly, I respectfully dissent from Part II(B) of the majority opinion.
In any event, even assuming it would be appropriate for us to sua sponte reach this issue, the cases that Judge Bacharach cites in support of his implicit-authority theory indicate only that HUD enjoys authority to fill gaps in NAHASDA by promulgating rules and regulations. See id. at 1239-40; Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ("If Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation." (emphasis added)); Morton v. Ruiz, 415 U.S. 199, 231, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974) ("The power of an administrative agency to administer a congressionally created and funded program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress." (emphasis added)); Morrow v. Clayton, 326 F.2d 36, 45 (10th Cir. 1963) ("We think the promulgation of the regulation by the Secretary was a lawful exercise of the power and authority vested in him [by statute] to administer the program...." (emphasis added)). Yet Judge Bacharach doesn't identify a rule or regulation that would allow HUD to recoup overpayments by administrative offset. Neither does HUD. Thus, even assuming that "Congress implicitly delegated to HUD the authority to fill [NAHASDA's] statutory gap" by promulgating such a regulation, Op. of Bacharach, J., 10, it doesn't appear that HUD exercised that implicit authority here. Accordingly, even if it were appropriate for us to raise this theory sua sponte, see Greenlaw, 554 U.S. at 243, 128 S.Ct. 2559, it wouldn't provide a basis for reversal.
As a final matter, Judge Bacharach suggests that the Tribes have somehow waived any argument that such rules or regulations don't exist. See Op. of Bacharach, J., 1240 ("[T]he [T]ribes have not questioned the sufficiency of HUD's implementing regulations."); id. at 1240-41 n.5 ("The [T]ribes have argued only that HUD lacked statutory authority, not that HUD failed to properly implement that authority by adopting regulations."). But as the appellant, HUD must identify a valid basis for reversing the district court's rulings. See Nixon v. City & Cty. of Denver, 784 F.3d 1364, 1366 (10th Cir. 2015) ("The first task of an appellant is to explain to us why the district court's decision was wrong."). As appellees, on the other hand, the Tribes have no obligation to attempt to refute a potential basis for reversal that HUD has never advanced. See Headrick v. Rockwell Int'l Corp., 24 F.3d 1272, 1278 (10th Cir. 1994) ("In preparing briefs and arguments, an appellee is entitled to rely on the content of an appellant's brief for the scope of the issues appealed...." (quoting Pignons S.A. de Mecanique v. Polaroid Corp., 701 F.2d 1, 3 (1st Cir. 1983))). Contrary to Judge Bacharach's suggestion, therefore, the Tribes simply cannot waive a response to an argument that HUD doesn't make.
The rule provides: "A person aggrieved by an unlawful search and seizure of property or by the deprivation of property may move for the property's return." The majority cites Clymore v. United States, 415 F.3d 1113 (10th Cir. 2005), where we held, without distinguishing between cash and other property, that a person cannot recover property under the rule if "the government no longer possesses the property." Id. at 1120. The majority also looks to Diaz v. United States, 517 F.3d 608 (2d Cir. 2008), where the Second Circuit concluded the government enjoys sovereign immunity when it has wrongfully seized a defendant's money but also has disbursed it because, lacking the defendant's particular cash, the government could only pay back "the cash equivalent." Id. at 611.
These cases arose under a different legal provision. Transplanting them to the § 702 context is unwarranted. As one scholar has observed, Rule 41(g) by its terms "requires the existence of `property' that is capable of return." Colleen P. Murphy, "Money as a `Specific' Remedy," 58 Ala. L. Rev. 119, 151 (2006). By contrast, § 702, as Bowen explained, turns on whether the relief is specific or substitutionary. See 487 U.S. at 893, 108 S.Ct. 2722; see also Murphy, supra, at 142 (explaining the Bowen "majority construed `damages' in section 702 of the APA to connote substitutionary monetary relief"). "Thus, an even stronger argument can be made under section 702 than under Rule 41(g) that the defendant need not possess the monetary res." Murphy, supra, at 151.
